Tonga

Cyclone Ian Reconstruction and Climate Resilience Project

                                   Redacted Report




                                                  June 2019
                                Statement of Use and Limitations

This Report was prepared by the World Bank Group (the WBG) Integrity Vice Presidency (INT).
It provides the findings of an INT administrative inquiry (the Investigation) into allegations of
corrupt, fraudulent, collusive, and/or coercive practices, as defined by the WBG for purposes of
its own policies, rules and procedures (the WBG’s Framework regarding Anti-corruption), in
relation to the WBG-supported activities. The purpose of the Investigation was to allow the WBG
to determine if the WBG’s Framework regarding Anti-corruption has been violated.

This Report is being shared to ensure that its recipients are aware of the results of the INT
Investigation. However, in view of the specific and limited purpose of the Investigation underlying
this Report, this Report should not be used as the sole basis for initiating any administrative,
criminal, or civil proceedings. Moreover, this Report should not be cited or otherwise referred to
in the course of any investigation, in any investigation reports, or in any administrative, civil, or
criminal proceedings.

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subsequent judicial, administrative or other proceeding pursued in connection with this matter.
The WBG’s privileges and immunities cannot be waived without the prior express written
authorization of the WBG.




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Background

In January 2014, Tropical Cyclone Ian hit the South Pacific region. It had a devastating impact on
the Kingdom of Tonga (“Tonga”), including the Ha’apai Island Group. As part of the response to
the cyclone, in June 2014, Tonga and the International Development Association (“IDA”) signed
a Financing Agreement for the Tonga Cyclone Ian Reconstruction and Climate Resilience Project
(the “Project”). Project financing provided a combined US Dollars (“US$”) 12 million in IDA
credits and grants, US$ 1.8 million in Trust Funds, and a US$ 2.09 million contribution from the
Government of Tonga. The Project became effective on July 2014 and closed in November 2018.

The Project sought to: (i) restore housing, community facilities, and basic services to the affected
population of Ha’apai; and (ii) strengthen Tonga’s resilience to natural disasters. This was to be
achieved, in part, though the construction of new climate resilient housing.

A company (the “Company”) bid for and was awarded a Project contract (the “Contract”).

Allegations

Following an administrative review, the Bank’s Task Team found evidence of significant
overbilling by the Company. The Task Team alerted INT to the Company’s potential misconduct.

The Project Implementing Entity (“PIE”) terminated the Company Contract due to a fundamental
breach of its terms.

Based on the Task Team’s preliminary findings, INT opened an inquiry into the Company.

Findings

       Evidence indicates that the Company repeatedly misrepresented the extent of
       Contract work completed so as to overbill by more than Tongan Pa’anga 650,000.

The Contract provided that the Company would be compensated for the value of work completed.
To that end, the Company was supposed to provide the Project Manager at the PIE with monthly
statements estimating the value of work executed.

Evidence indicates that the Company submitted five claims to the PIE. Evidence indicates that
these claims were all paid. Evidence indicate that, with the exception of its request for advanced
payment, the Company misrepresented the work completed in its claims for payment.

Evidence indicates that all of the Company’s payment claims to the PIE included supporting
documents detailing work the purportedly completed and that these documents were signed by
Project representatives prior to payment. Evidence indicates that while some Project
representatives were aware of the discrepancy between the Company’s work completed and work
billed for, the claims were nonetheless approved.




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Evidence indicates that, in total, the Company over-invoiced and was paid more than Tongan
Pa’anga 650,000 in excess of the actual value of the Company’s completed Contract work.

Corrective Actions

The World Bank imposed the sanction of debarment with conditional release on the Company.
The debarment extends to any legal entity that the Company directly or indirectly controls.




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